Customer-Driven Marketing Strategy:

Creating Value for Target Customers

Customer-Driven Marketing Strategy: Creating Value for Target Customers

• Market Segmentation

• Market Targeting

• Differentiation and Positioning

Topic Outline

Market Segmentation

Market Segmentation

Market segmentation

Dividing a market into smaller segments

with distinct needs, characteristics, or

behavior that might require separate

marketing strategies or mixes.

Market Segmentation

• Segmenting consumer markets

• Segmenting business markets

• Segmenting international markets

• Requirements for effective segmentation

Copyright ©2014 by Pearson Education

Market Segmentation

Geographic segmentation

Demographic segmentation

Psychographic segmentation

Behavioral segmentation

Segmenting Consumer Markets

Market Segmentation

• Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities

Segmenting Consumer Markets

Market Segmentation

Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality

Segmenting Consumer Markets

Market Segmentation

Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups

Gender segmentation divides the market based on sex (male or female)

Market Segmentation

Income segmentation divides the market into affluent, middle-income or low-income consumers

Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits

Segmenting Consumer Markets

Market Segmentation

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product

• Occasions • Benefits sought • User status • Usage rate • Loyalty status

Segmenting Consumer Markets

Market Segmentation

Multiple segmentation is used to identify smaller, better-defined target groups

Using Multiple Segmentation Bases

PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups.

Market Segmentation

Geographic location

Economic factors

Political-legal factors

Cultural factors

Segmenting International markets

Market Segmentation

Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries

Segmenting International Markets

Market Segmentation

To be useful, market segments must be:

Requirements for Effective Segmentation

Measurable Accessible

Substantial Differentiable

Actionable

Market Targeting

Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve

Selecting Target Market Segments

Market Targeting

• Segment size and growth

• Segment structural attractiveness

• Company objectives and resources

Evaluating Market Segments .

Market Targeting

Undifferentiated marketing targets the whole market with one offer

– Mass marketing

– Focuses on common needs rather than what’s different

Target Marketing Strategies

Market Targeting

Differentiated marketing targets several different market segments and designs separate offers for each

• Goal is to achieve higher sales and stronger position

• More expensive than undifferentiated marketing

Target Marketing Strategies

Market Targeting

• Concentrated marketing targets a small share of a large market

• Limited company resources

• Knowledge of the market

• More effective and efficient

Target Market Strategies

Marketing Targeting

Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations

• Local marketing

• Individual marketing

Target Market Strategies

Market Targeting

Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups

• Cities

• Neighborhoods

• Stores

Target Market Strategies

Market Targeting

Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers

• Also known as:

– One-to-one marketing

– Mass customization

Target Market Strategies

Market Targeting

Depends on:

• Company resources

• Product variability

• Product life-cycle stage

• Market variability

• Competitor’s marketing strategies

Choosing a Target Market

Differentiation and Positioning

Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products

Perceptions – Impressions – Feelings

Differentiation and Positioning

Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

Differentiation and Positioning

• Identifying a set of possible competitive advantages to build a position

• Choosing the right competitive advantages

• Selecting an overall positioning strategy

• Communicating and delivering the chosen position to the market

Choosing a Differentiation and Positioning Strategy

Differentiation and Positioning

Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

Identifying Possible Value Differences and Competitive Advantages

Differentiation and Positioning

Identifying a set of possible competitive advantages to build a position by providing superior value from:

Choosing a Differentiation and Positioning Strategy

Product differentiation

Service differentiation

Channel differentiation

People differentiation

Image differentiation

Differentiation and Positioning

Difference to promote should be:

Choosing the Right Competitive Advantage

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

Differentiation and Positioning

Value proposition is the full mix of benefits upon which a brand is positioned

Selecting an Overall Positioning Strategy

Differentiation and Positioning

• To (target segment and need) our (brand) is (concept) that (point of difference)

Developing a Positioning Statement

Differentiation and Positioning

Communication and Delivering the Chosen Position

Choosing the positioning is often easier than implementing the position.

Positioning and Targeting for Entrepreneurial Offerings: The Key Strategic Questions for any Venture

• “What am I selling to whom and why should they buy?”

• Positioning: “What should be the perceived value of my offering compared to the competition?”

• Targeting: “Which is (are) my target segment(s)?”

35

36

Market Driven Strategy

• Distinctive Competence

•Sustainable Competitive Advantage

How should I be positioned?

To which target market(s)?

•Pricing

•Screening ideas

•Product/Service development

•Naming the company and products

•Distribution

•Sales force

•Logos and stationary

•Promotion

•Public relations

•Advertising

•Raising capital

•Recruiting

37

Where Does Sustainable Advantage Come From for Entrepreneurs?

Sustainable Competitive Advantage (S.C.A.) from an Entrepreneurial Marketer’s Point of View

Customer’s point of view Sustainable differential perceived values vs. competition comes from

distinctive competence – if and only if the customer perceives it! Possible Sources of S.C.A.

– Technology, patents – Design, perceived high quality, image, customer habits – Exceptional customer service, Ease of doing business with you, Reliability,

“Coolness” – Reputation, trust, & ??? – (Price usually isn’t sustainable.)

38

Some Effective Value Propositions which Lever Distinctive Competence

• Dell for about 10 years

• Victoria’s Secret

• Pom Wonderful

• Orvis

• Southwest Airlines

• Google

• David’s Bridal

39

• Priceline.com

• Apple • Starbucks • Diapers.com/Soap.com/Beautybar.c

om/WAG.com/Yoyo.com

• Hindustan Lever • Toyota –Lexus • Milo.com • Scancafe.com

Positioning Issues • Why should a member of the target segment buy

my product or service vs. the competition’s? • What are the unique differentiating characteristics

of my product or service( the incremental value vs. the competitors) as perceived by members of the target segment(s)?

• Typically, humans cannot make decisions balancing more than two to four differentiating attributes at a time.

• Features vs. benefits

40

The Wharton School: An Entrepreneurial Positioning Example

• Global

• Cross-functional

• Leadership

• Technology

41

The Wharton School

University of Pennsylvania

• Globalization • Cross Functional Integration • Leveraging Technology • Leadership

The Best Positioning Becomes an Offering that is an Exemplar

• Creates new category or subcategory • Represents it to the mind of consumers • Is an advocate for the new category

– Asahi Super Dry Beer – Betty Crocker Gluten Free Cake Mixes – Salesforce.com – Geek Squad – ESPN – Zappos (Service)

• Is a thought leader & innovator – Tide Coldwater – Milo.com

• Invests enough to be the clear leader

42 Source: D. Aaker, 11/30/11 “Marketing News”

Positioning via Names

Is a name

enough?

It should be!

A good name communicates your positioning in a memorable way

43

Positioning via Names

44

Positioning via Names

45

Positioning and Slogans If the name isn’t enough

• Zappos – “Powered by Service” • Forbes: “Capitalist Tool” • Synygy: the Incentive Compensation Company • Michelin: “Because So Much Is Riding on Your Tires” • Timken (Bearings): “Precision Thinking” • Seiko Kinetic Watches: “Someday All Watches Will Be

Made This Way” • “Since 1735 there has never been a quartz Blancpain

Watch. And there never will be.” • Diapers.com “We are number one in number two!” “We Deliver Everything but the Baby” • Like a good neighbor, State Farm is there • Whatever it is…you can get it on Ebay • “We try harder” - Avis

46

Slogan Ground Rules*

1. Slogan can be your positioning or a mini vision statement 2. Be consistent 3. Avoid clichés – “Genuine” Chevy, Miller, Underwear “Ultimate” Staples, Raincoats. . . 4. Take a stand – “Blancpain” 5. Use numbers, but have them backed up 6. Beware of a boomerang effect -- Nike: “Just Do It” Foreign Labor Practices Ford: “Quality is Job One” 7. Be brief Honda: “Simplify” Hertz: “Exactly” 8. Make it your own

FedEx: “When it Positively, Absolutely has to….” * Adapted from R. W. Keidel, Wall Street Journal, June 16, 1997

47

Case Study: Tandem’s East (Lodish et al, 2001)

An Entrepreneurial Positioning Example: Wharton Business school (Lodish et al., 20010

Positioning and Slogans (Lodish et al., 2001)